All posts in category Eagle Ford

EOG Resources

TITLE: Sod house. McKenzie County, North Dakota

TITLE: Sod house. McKenzie County, North Dakota (Photo credit: Wikipedia)

EOG : NYSE : US$135.69
BUY 
Target: US$194.00

EAGLE FORD DRIVES FURTHER GAINS IN CAPITAL PRODUCTIVITY
Investment thesis
We increased our target price $18 to $194 per share due to ~10% increase in capital productivity (underpinned by the Eagle Ford) and a
higher oil price realization. The Eagle Ford comprises almost 50% of EOG’s capital outlays this year. Simply put, EOG’s Eagle Ford leasehold
generates the highest returns of any large-scale NAM resource play.
Our liquids growth outlook of ~28% is toward the high end of guidance (16%-30%). The calibration of capital and production imply EOG’s
capital productivity is ~15% superior to industry (liquids-normalized).
Investment highlights
 Further improvement in Eagle Ford well performance: In the latest quarter, ~20 select wells in Gonzales/Karnes Counties (“east area”)
commenced production at over 4,000 Boepd (~90% liquids) suggesting recoveries of 2,000+ Mboe. Year-to-date, Eagle Ford wells have commenced production at ~1,200 Bopd the first 30 days, suggesting a recovery of ~850 Mbo for a cost of ~$6 million per well.
This represents a ~30% improvement in well performance versus last year. Wells in the “east area” average ~1,600 Boepd the first 30 days, suggesting recoveries of 1,000-1,100 Mboe and wells in the “west area” average ~800 Boepd the first 30 days, suggesting recoveries of 500-600 Mboe.
 Strong initial Three Forks Second Bench test, continued robust 160- acre down spaced results in core Parshall field: Recent infill Bakken
tests in the Parshall field on 160-acre spacing have commenced production at an average 30-day rate of ~2,000 Bopd, suggesting recoveries of ~1,000 Mbo per well. In the Antelope area, southwest of the Parshall field in McKenzie County, a Three Forks Second Bench test commenced at 3,150 Bopd.

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by jackbassteam on May 9, 2013  •  Permalink
Posted in Eagle Ford, Energy, Fracking
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Posted by jackbassteam on May 9, 2013

http://amp2012.com/2013/05/09/eog-resources/

Comstock Resources Target $ 30

Schematic E-W section showing the Eagle Ford S...

Schematic E-W section showing the Eagle Ford Shale among the geological strata beneath the DFW Metroplex (Photo credit: Wikipedia)

CRK : NYSE : US$15.66
BUY 
Target: US$30.00

COMPANY DESCRIPTION:
Comstock Resources is an exploration and production company focused on development of the Eagle Ford Shale, the Permian Basin and the Haynesville Shale.

DEEP VALUE; IMPROVING EAGLE FORD RESULTS


Investment thesis
We are increasing our target price $1 to $30 per share following model refinements. To clearly illustrate Comstock’s deep value opportunity, CRK trades at ~30% discount to the group (’13E EBITDA) though should generate ~50% stronger CFPS growth (‘13-‘15E) via Eagle Ford execution. Accordingly, we feel CRK has 80%+ upside vs. the group’s 30%+ upside.
Permian divestiture eliminates capital structure concern
Pro forma the sale, Comstock’s net debt-to-EBITDA at year-end ’13 declines from ~3.5x to ~1.9x, which is in line with the industry median, and net debt-to-EBITDA should modestly decline thereafter assuming ~$500 million per annum capital plan.
Accelerating Eagle Ford development/volume ramp
As a consequence of the liquidity provided by the Permian sale, the company is increasing Eagle Ford activity from three to six rigs in 2H13 and plans to drill 72 gross wells (~65% WI) this year. McMullen County comprises ~90% of this year’s activity (four- to five-year drilling inventory). We believe acceleration in Eagle Ford activity should drive almost 20% quarterly oil production growth the balance of the year and oil production should exit the year at ~8.5 Mbopd vs. 4.8 Mbopd in 1Q/13.
Improving Eagle Ford results
In 1Q/13, Comstock Eagle Ford wells averaged ~670 Boepd the first 30 days, suggesting recoveries of almost 500 Mboe, which was a ~10% improvement in well performance q/q normalized for lateral length.
Overall capital productivity enhanced by ~10% with Eagle Ford JV
The company’s Eagle Ford JV assigns a one-third interest for the equivalent of $25k per acre. Assuming 80-acre spacing, the partner pays $0.67 million and receives a one-third interest in each well. In essence, the JV is funding ~10% ($30+ million) of the company’s ’13 capital plan

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by jackbassteam on May 6, 2013  •  Permalink
Posted in Eagle Ford, Fracking
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Posted by jackbassteam on May 6, 2013

http://amp2012.com/2013/05/06/comstock-resources-target-30/

Abraxas Petroleum Eagle Ford / Williston Future

Map of Texas highlighting McMullen County

Map of Texas highlighting McMullen County (Photo credit: Wikipedia)

AXAS : NASDAQ : US$2.24
BUY 
Target: US$3.00

COMPANY DESCRIPTION:
Abraxas Petroleum Corporation, an independent energy company, engages in the acquisition, development, exploration, and production of oil and gas principally in the Rocky Mountain, Mid-Continent, Permian Basin, and Gulf Coast regions of the United States. The company was founded in 1977 and is based in San Antonio, Texas.

ADDED FINANCIAL FLEXIBILTY; REITERATE BUY AND $3 TARGET
Investment recommendation
AXAS has solid positions in two of the leading unconventional resource plays in the US in the Williston Basin (WB) and Eagle Ford (EF). We
believe strong production and cash flow growth, along with deleveraging the balance sheet, will be catalysts to drive a higher stock price.
Investment highlights
 Continued success in the EF: In McMullen County, the Gran Torino A 1H averaged 790 Boe/d (89% oil) on a restricted choke over its initial
30 days and is currently flowing to sales at a rate of 720 Boe/d (88% oil). The Mustang 3H, which was brought online for ~$6.2M in mid/late March, continues to outperform AXAS’ 575 MBoe EUR type curve while the Mustang 2H is currently being completed with a 19- stage frac. AXAS owns an 18.75% working interest (WI) in all mentioned EF wells.
 producing ~150 Boe/d before being shut in during the 2H and 3H completions. AXAS owns a 49% WI in the Ravin wells.

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by jackbassteam on April 11, 2013  •  Permalink
Posted in Eagle Ford, Fracking
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Posted by jackbassteam on April 11, 2013

http://amp2012.com/2013/04/11/abraxas-petroleum-eagle-ford-williston-future/

Comstock Resources Target Price Increased To $ 28

CRK : NYSE : US$18.00
BUY 
Target: US$28.00

COMPANY DESCRIPTION:
Comstock Resources is an exploration and production company focused on development of the Eagle Ford Shale, the Permian Basin and the Haynesville Shale.

Investment thesis


We are increasing our target price $3 to $28 per share following the divestiture of the company’s Permian Basin assets. Specifically, Comstock is selling 53.3K net acres in the Permian Basin (40.2K net acres in Reeves County) for $768 million in cash. The properties currently produce ~3.3 Mboepd (~73% oil). Robust sales price, acceleration of Eagle Ford development drives $3 increase in CRK target price Assuming a $60K/Mboepd production rate multiple, the divesture equates to an elevated $10.7K/acre ($14.2K/Reeves County acre) transaction multiple.

Importantly from a value perspective, the company plans to increase development activity from a three-rig to a six-rig program the second half of the year and drill 72 gross Eagle Ford wells (~65% WI) with ~80% of the wells in McMullen County and the balance in Atascosa/LaSalle Counties.
Permian divestiture eviscerates capital structure concern Pro forma the sale, Comstock’s net debt-to-EBITDA at year-end ’13 declines from ~3.5x to ~2x, which is in line with the industry median, and net debt-to-EBITDA turns should stabilize thereafter assuming $400+ million per annum capital plan.
Improving Eagle Ford results
In 4Q/12, Comstock completed seven Eagle Ford wells that averaged ~580 Boepd the first 30 days, suggesting recoveries of ~475 Mboe for a drill/complete cost of $8+ million. Overall capital productivity enhanced by ~9% with Eagle Ford JV The company’s Eagle Ford JV assigns a one-third interest in the next 100 wells for the equivalent of $25k per acre. Assuming 80-acre well spacing, the partner pays $0.67 million and receives a one-third interest in each well. In essence, the JV is funding ~9% ($30+ million) of the company’s non-Permian Basin go forward capital spending this year.

Overall capital productivity enhanced by ~9% with Eagle Ford JV
The company’s Eagle Ford JV assigns a one-third interest in the next 100 wells for the equivalent of $25k per acre. Assuming 80-acre well
spacing, the partner pays $0.67 million and receives a one-third interest in each well. In essence, the JV is funding ~9% ($30+ million) of the
company’s non-Permian Basin go forward capital spending this year.

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by jackbassteam on March 19, 2013  •  Permalink
Posted in Eagle Ford, Shale
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Posted by jackbassteam on March 19, 2013

http://amp2012.com/2013/03/19/comstock-resources-target-price-increased-to-28/

Carrizo Oil & Gas Price Target $ 34

Rectangular joints in siltstone and black shal...

Rectangular joints in siltstone and black shale within the Utica Shale (Ordovician) near Fort Plain, New York. (Photo credit: Wikipedia)

CRZO : NASDAQ : US$22.58
BUY 
Target: US$34.00

COMPANY DESCRIPTION:
Carrizo is an E&P company with operating areas in the Barnett Shale, Marcellus Shale, Eagle Ford Shale, Niobrara Shale and U.K. North Sea.

Investment thesis


We lowered our target price $1 to $34 per share due to a slightly higherNGL composition. Notably, our target price includes a value of $20K per
acre for the company’s Utica Shale leasehold in Guernsey County. Early this year, Carrizo exercised its option to increase its leasehold in the Utica play to 17,000 net acres; approximately 50% of the acreage is in highly prospective Guernsey County. The company plans to drill its first  Utica test in Guernsey County this summer.
Eagle Ford/Niobrara drive expected oil production outperformance In ’13, our oil/liquids growth outlook is ~38%, which is ~10% above
guidance (28%) underpinned by ongoing development in the Eagle Ford and Niobrara plays. Carrizo is conducting a three-rig program in the
Eagle Ford and two-rig program in the Niobrara. The company has generated competitive/consistent results across both plays.
Sale of North Sea lowers net debt-to-EBITDA to critical 3x threshold The recent sale of the Huntington field along with a series of minor liquidity events in the fourth quarter lowered the company’s net debt-to- EBITDA from 3.7x to 3x. Importantly, Carrizo is on a path to further lower net debt-to-EBITDA below 3x in future years. Additionally, the company has revolver financing visibility into late ’14 conservatively assuming the current bank borrowing base.
Almost $600 million in financial liquidity generated since September Last September, the company issued $300 million of term debt. After
accounting for the term debt, Carrizo’s bank line actually increased by $40 million due to the company’s oil production growth. Additionally,
the company generated ~$130 million in cash proceeds through two JVs in the Niobrara Shale and the sale of non-core Gulf Coast and Utica
Shale assets. Combined with the North Sea sale, these transactions increased the company’s financial liquidity by ~$590 million.

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by jackbassteam on February 28, 2013  •  Permalink
Posted in Eagle Ford, Energy, Fracking, Natural Gas
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Posted by jackbassteam on February 28, 2013

http://amp2012.com/2013/02/28/carrizo-oil-gas-price-target-34/

Penn Virginia Corporation : EAGLE FORD-FOCUSED

List of highways in Lavaca County, Texas

List of highways in Lavaca County, Texas (Photo credit: Wikipedia)

PVA : NYSE : US$4.05
BUY 
Target: US$6.50

COMPANY DESCRIPTION:
Penn Virginia Corporation is an exploration and production company with operations in Texas, the Mid- Continent, Appalachia and Mississippi.

Investment recommendation


PVA has been successfully transitioning to a liquids-focused company while retaining its leverage to an improvement in natural gas prices.
Liquidity has been enhanced to carry out the company’s Eagle Fordfocused drilling plan. We believe the stock offers solid value for patient investors at these levels.
Investment highlights
 The Eagle Ford (EF) remains the focus area for PVA, commanding ~88% of 2013 capex. The Technik #1H well in Lavaca County, which tested at 1,445 Boe/d (79% oil), was the company’s best well in Lavaca to date. Beginning this year, PVA plans to initiate the use of pad drilling in the EF, which should decrease costs 8-10%. Costs are also coming down on the completion side.
 PVA in our view has adequate liquidity to fund its 2013 capex program. Cash plus revolver availability at YE12 of $316M is ~2x the outspend we are modeling for 2013.
 Following Q4/12 results and 2013 guidance, we are adjusting estimates for the year. Production goes to 16 MBoe/d (63% oil/NGLs) from 15.9 MBoe/d (60% oil/NGLs), EPS goes down to ($0.72) from ($0.66), but CFPS goes up to $3.58 from $3.33 on higher DD&A.
Valuation
Using a NAV-based methodology, our $6.50 price target, down from $8, represents a ~20% discount to our $8.25 NAV, which is down from $10.

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by jackbassteam on February 25, 2013  •  Permalink
Posted in Eagle Ford, Fracking, Natural Gas
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Posted by jackbassteam on February 25, 2013

http://amp2012.com/2013/02/25/penn-virginia-corporation-eagle-ford-focused/

Rosetta Resources

Rosetta (novel)

Rosetta (novel) (Photo credit: Wikipedia)

ROSE : NASDAQ : US$51.78
BUY 
Target: US$70.00

COMPANY DESCRIPTION:
Rosetta Resources is an exploration and production company with operations in south Texas and northern Montana.

Investment thesis


We are lowering our target price $5 to $70 per share due to a lower expected long-term (‘14+) oil percentage relative to overall liquids production. Specifically, assuming three rigs running in Gates Ranch and one rig respectively in the Briscoe Ranch and Central Dimmit County
areas, we believe oil should comprise ~40% of total liquids production versus our prior expectation of ~45%. Further, given this disposition of drilling activity, liquids should constitute ~62.5% of total production, which is unchanged from our prior analysis
and company’s guidance.
Given a ~$700 million ’13 capital plan, we anticipate Rosetta exits ‘13 fractionally above the high end of their guidance of 52-56 Mboepd.
ROSE trades at a ~20% discount to the group yet should generate ~30% per annum CFPS growth (’12-’14E) versus the sector’s ~20% CAGR.
Accordingly, we feel ROSE offers ~10% differential upside to the group. Rosetta’s a natural consolidator in the Eagle Ford trend with a capital
structure that has significant debt capacity Considering Rosetta’s exceptional execution in the Eagle Ford, the company should be a natural asset consolidator in the trend. Moreover, Rosetta’s net debt-to-EBITDA is only ~1x versus the industry’s net debt to- EBITDA financial leverage of ~2x. This implies the company has ~$500 million of incremental debt capacity even before accounting for the debt capacity of an acquired asset.
Even assuming recent extremely weak NGL prices, equity downside limited Last month, the NGL complex retreated to ~34% of NYMEX oil, which is the lowest relative valuation evidenced thus far in this cycle. Long-term NGLs should comprise ~37.5% of Rosetta’s production. Assuming the NGL complex relative to NYMEX oil was to remain at the recent exceedingly weak level, the downside to our target price is just ~4%.

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by jackbassteam on February 10, 2013  •  Permalink
Posted in Eagle Ford, Natural Gas, Shale
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Posted by jackbassteam on February 10, 2013

http://amp2012.com/2013/02/10/rosetta-resources/

Comstock Resources

Schematic E-W section showing the Eagle Ford S...

Schematic E-W section showing the Eagle Ford Shale among the geological strata beneath the DFW Metroplex (Photo credit: Wikipedia)

Comstock Resources

CRK : NYSE : US$14.39
BUY 
Target: US$26.00

COMPANY DESCRIPTION:
Comstock Resources is an exploration and production company focused on development of the Eagle Ford Shale, the Permian Basin and the Haynesville Shale.

Investment thesis


We are lowering our target price $1 to $26 per share due to the base effect of appreciably less than expected fourth quarter oil production.
Normalized for ~750 Bopd of curtailed production due to offset well stimulation in the Eagle Ford and artificial lift installation in the Eagle Ford and Wolfbone programs, oil production in the fourth quarter would have been ~6,850 Bopd versus our expectation of ~7,700 Bopd
Our ’13 oil growth expectation of ~43% is toward the low end of company guidance (40%-60%), while we anticipate gas production declines ~25%,
which is at the midpoint of guidance (22%-28%).

Comstock offers modestly greater CFPS growth (’12-’14E) relative to the sector though trades at 20%+ discount (’13E EBITDA). CRK has ~80%
potential upside to our target price versus ~30% upside for the group.
Investment highlights
Elevated leverage should subside as an investor concern over the next year At year-end, Comstock’s net debt-to-EBITDA was ~4x, though should fall toward 3x by the end of this year, and decline below 3x in ’14E.
Solid Eagle Ford/Wolfbone results, encouraging industry Wolfcamp test In 3Q/12, Comstock completed six Eagle Ford wells that commenced at an
average of ~800 Boepd, suggesting a recovery of 500+ Mboe. Vertical Wolfbone wells have commenced at an average of ~350 Boepd and recover ~200 Mboe for a cost of ~$4.5 million. A recent nearby industry horizontal Wolfcamp test (~3,600’ lateral, 20 frac stages) produced ~950 Boepd the first 30 days, implying a recovery of ~700 Mboe.
Overall capital productivity increases ~7% with Eagle Ford JV The company’s Eagle Ford JV assigns a one-third interest in the next 100 wells for the equivalent of $25k per acre. Assuming 80-acre well spacing, the partner pays $0.67 million and receives a one-third interest in each well. In essence, the JV funds ~7% (~$30 million per annum) of the company’s capital spending.

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by jackbassteam on January 28, 2013  •  Permalink
Posted in Eagle Ford, Energy, Haynesville Shale, Shale
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Posted by jackbassteam on January 28, 2013

http://amp2012.com/2013/01/28/comstock-resources/

Comstock Resources Target $ 27

Comstock miners, 1880s. Caption on original: &...

Comstock miners, 1880s. Caption on original: “To Labor is to Pray.” (Photo credit: Wikipedia)

Comstock Resources

CRK : NYSE : US$14.72
BUY  Target: US$27.00

COMPANY DESCRIPTION:
Comstock Resources is an exploration and production company focused on development of the Eagle Ford Shale, the Permian Basin and the Haynesville Shale.

Investment recommendation


After two days of investor meetings, management seems highly aware of the need to drive cost improvement into their vertical Wolfbone program
in Reeves County and grow/execute into their leveraged cap structure.
In ’13, we expect the company to deliver ~40% oil production growth, while Comstock indicated oil production should increase 40%-60% this
year. For every 5% of incremental oil production growth (~$420 million capital plan), we believe fair value increases ~15%.
Comstock offers modestly stronger CFPS growth (’12-’14E) relative to the sector though trades at ~20% discount (’13E EBITDA). Accordingly, CRK
has ~80% upside to our target price versus ~30% upside for the group. Elevated leverage should subside as an investor concern over the next year
At year-end, Comstock’s net debt-to-EBITDA was ~3.7x, though should fall to almost 3x by the end of this year and decline below 3x in ’14. In ’13, assuming ~$420 million in capital spending, the company’s negative FCF disposition is ~20%, whereas the industry is ~30% FCF negative.
Solid Eagle Ford/Wolfbone results, encouraging industry Wolfcamp test Last quarter, Comstock completed six Eagle Ford wells that commenced
at an average of ~800 Boepd, suggesting a recovery of 500+ Mboe. Since acquiring acreage in Reeves County, Comstock has completed 20 vertical
Wolfbone wells, which have commenced at an average of ~350 Boepd and should recover ~200 Mboe for a cost of ~$4.5 million. A recent nearby industry horizontal Wolfcamp test (~3,600′ lateral, 20 frac stages) commenced at ~950 Boepd, implying a recovery of ~700 Mboe.
Overall capital productivity increases ~5% with Eagle Ford JV The company’s Eagle Ford joint venture assigns a one-third interest in the next 100 wells for the equivalent of $25k per acre. Assuming 80-acre well spacing, the partner pays $0.67 million per well and receives a one third interest in each well. The joint venture in essence funds ~5% (~$20 million per annum) of the company’s capital spending.

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by jackbassteam on January 21, 2013  •  Permalink
Posted in Eagle Ford, Haynesville Shale, Shale
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Posted by jackbassteam on January 21, 2013

http://amp2012.com/2013/01/21/comstock-resources-target-27/

The Hype About America’s Energy Boom

Oil Guru Destroys All Of The Hype About America’s Energy Boom

 

5/14

   

The gap between production and consumption is 9 million barrels of oil a day. “It is unlikely that the U.S. will become energy independent,” Berman argues.

The gap between production and consumption is 9 million barrels of oil a day.

Arthur Berman

Read more: http://www.businessinsider.com/arthur-berman-shale-is-magical-thinking-2013-1?op=1#ixzz2IXJjv61y

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by jackbassteam on January 20, 2013  •  Permalink
Posted in Alternate Fuels, Bakken, Bakken Shale, Barnet Shale, Barnett Shale, Eagle Ford, Energy
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Posted by jackbassteam on January 20, 2013

http://amp2012.com/2013/01/20/the-hype-about-americas-energy-boom/

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